I note the Taxpayer’s Alliance are publishing a report in the morning on their ideas for the UK tax system. I haven’t got a copy yet but the Guardian summarises its main recommendations as follows:
The most eye-catching proposal in the 417-page report, which is jointly published by the Taxpayers’ Alliance and the Institute of Directors, is a call for a “single proportionate income tax rate” of 30%.
This would be achieved by cutting the ratio of spending and taxation to 33% of national income, forcing Osborne to maintain the current level of spending cuts until 2020.
In his original fiscal mandate, outlined in his emergency budget in June 2010, Osborne had expected the austerity plan to continue until 2015. But in his autumn statement last year Osborne announced that the cuts would be extended for a further two years.
The report by the Taxpayers’ Alliance says that a single income tax could be introduced in six steps:
• Cut taxes to 33% of national income. Taxes currently account for 37.5% of national income.
• Ensure that marginal tax rates do not exceed 30% and the personal tax allowance should rise to £10,000.
• Taxes on capital and labour income “disguised” as business taxes should be abolished and replaced with a tax on distributed income.
• Transaction, wealth and inheritance tax should be abolished.
• Consumption taxes should remain for the moment but transport taxes should be cut.
• Local authorities should raise half of their spending power from local taxes.